Port of Southampton

John Denham Excerpts

Wednesday 18th January 2012 Westminster Hall

[Mr John Denham (Southampton, Itchen) (Lab)]

I am grateful to Mr Speaker for granting this debate quickly, which, as will become clear, is appropriate. There are pressing issues facing the future of the port of Southampton that have to be resolved literally in the next few months if the full future of the port is to be secured. I am grateful for the strong and cross-party support here today from hon. Members from across Hampshire and the Isle of Wight.

May I say briefly that there is another issue about the future of the port of Southampton, which relates to investment in the cruise terminal and an application by Liverpool for a cruise terminal? That is not the subject of my remarks today. The arguments are well rehearsed, we believe in fair competition and the Minister is due to make an announcement on this in the fairly near future.

I want to concentrate on a different issue that is of equal importance to the future of Southampton and, in this case, critical to the future of the container terminal there. The debate has huge local, but also national, significance. Frankly, it presents a rare opportunity in the current economic climate, because a private sector company, Associated British Ports, is offering—indeed, is desperate—to invest £150 million of purely private money in infrastructure in the coming year. That investment is not just important for Southampton; it is vital for the infrastructure of UK plc. A study for Marine South East estimated that the contribution of the port of Southampton to the UK’s economy was £1.75 billion a year. Southampton is the fourth largest port in the UK, and the container terminal, operated by DP World, employs approximately 1,000 people. It is estimated that four jobs in the wider local economy are dependent on each of those jobs in the terminal.

Currently, most investment in UK infrastructure depends on public money for pump-priming, partnership and initial investment. However, ABP’s planned investment in Southampton is entirely private—it does not depend at all on matching investment. That is such good news that one might wonder why we need to have a debate in Westminster Hall. The problem is that over several years the project has suffered from entirely avoidable delay—mainly, it has to be said, at the hands of Government agencies, and partly due to the action of rival port operators who have exploited mistakes made by the Government machine to mount a legal challenge that is not in the public interest, but is purely to pursue their own commercial, competitive advantage.

Hon. Members from Hampshire and the Isle of Wight have come together today to urge the Minister to do everything he can, with his colleagues across Government, to ensure that there are no further delays. I am grateful for the briefing I have received from ABP, DP World and Unite, the union. All have exactly the same position on what needs to be done. Even in the days since requesting the debate, there has been some progress, but the project is so time-critical that any further slips, delays or mishaps—anyone taking their eye off the ball—could do immense damage.

Let me set the scene and the history. As I have said, the port is immensely successful. Productivity is high and Southampton is in the right geographical location for China and other south and east Asian trade, but the container business is changing. Some 13 years ago, the typical vessel was 4,000 TEUs—twenty-foot equivalent unit, which is the standard measure. Recently commissioned ships already in service are typically 9,000 to 10,000 TEUs, but in the next two years, ships as large as 16,000 TEUs will come into service. This is happening right across the industry with all the major carriers, and it certainly applies to Southampton’s major customers: the CMA CGM organisation and the G6, an alliance of Hapag Lloyd, OOCL, NYK, APL, MOL and Hyundai Merchant Marine. They have come together precisely to optimise the deployment of new and larger vessels.

Southampton can accommodate the larger, super-sized container ships if—but only if—it can reconstruct its existing container berths, known as 201 and 202, and carry out more extensive dredging both nearer the berth and the wider channel. That is what gives rise to the £150 million investment at the heart of the debate. Those ships are coming into service now and in the next two years, so the investment is time-critical. The risk is obvious—if there is any further delay and Southampton cannot offer its customers the capacity they want, business will be lost.

[Steve Brine (Winchester) (Con)]

I congratulate the right hon. Gentleman on securing the debate, which is as important to my constituents as it is to his and to those of other hon. Members here today. He rightly says that any further delay could be fatal. Will he confirm that the September 2012 to March 2013 “piling window”, as it is known, is the critical date window that we are tied to here? Any further delay would result in an additional 12-month delay in doing the work that is needed out in the channel.

[Mr Denham]

The hon. Gentleman is absolutely right, and I will explain the reason why that September to March period is so critical. For entirely legitimate environmental reasons, that activity cannot take place all year round, so we could miss that deadline. As I will say in a moment, contracts need to be let ahead of September if work is going to be started in September—that is critical. If it is not done by next year, the port clearly will be unable to offer the capacity it would like to for the latter part of 2012 and, in particular, 2013.

This debate should not be necessary. The need for investment was identified in a scoping study submitted by ABP to the Marine and Fisheries Agency, the predecessor of today’s Marine Management Organisation, in 2007—in what most people regard as perfectly good time to get the necessary approvals and to get the work under way. In January 2008, following consultation with various bodies, the MMO issued a formal scoping opinion that advised ABP of the scope and content of the required environmental impact assessment. That point is crucial, because not for the last time in this process, ABP was advised and directed to take a particular course of action, and it complied fully. ABP submitted its application on 15 December 2008. The applications were advertised using a form of words directed by the MMO. In February 2009, issues were raised in consultation by Natural England, the Environment Agency and the Royal Society for the Protection of Birds and, I understand, successfully resolved. However, in December 2009, nearly two years after the MMO’s original scoping opinion, the MMO then decided that the public notice it had supplied was incorrectly worded. ABP was asked to place further public notices, using replacement wording supplied by the MMO. That mistake delayed the process by a full 10 months. It is worth noting that Hutchison Ports, the operators of Felixstowe, did not raise any objections during the original consultation. However, following the re-advertisement and during the second consultation, it then did, arguing that the original environmental impact assessment, which was drawn up to the MMO’s specification, had not considered operational impact issues.

[Dr Thérèse Coffey (Suffolk Coastal) (Con)]

Will the right hon. Gentleman explain why Network Rail and the Highways Agency were not included in the original consultation?

[Mr Denham]

The point about this procedure is twofold. Throughout this process, ABP took guidance from the MMO as to what requirements it needed to fulfil. It was reasonable for ABP to do that. It is because it was not well advised—indeed, it was advised to do other things—that we have ended up in this position.

In April 2010, following the re-advertisement and the intervention from Hutchison, which has no local interest at all in this matter—it is purely a commercial rival issue—and having raised those issues, the chief executive of the MMO wrote to ABP, stating:

“Please be assured that the MMO is working pro-actively with ABP to resolve these cases swiftly.”

However, it was not until February 2011, more than three years after the original application, that the MMO finally issued consent, in good time to get this work under way.

[Mr Dave Watts (St Helens North) (Lab)]

Obviously, hon. Members from Merseyside oppose the proposed blocking of the cruise terminal at Liverpool. However, on this issue we fully support my right hon. Friend. Does he agree that this scheme demonstrates how out of date our planning process is? Is not the economy suffering because we cannot make quick decisions? I hope the Minister will consider speeding the whole process up, so that we can get such schemes introduced much more quickly.

[Mr Denham]

I want to concentrate on getting this scheme approved. However, when the dust has settled it will be clear that the scope for getting things wrong and for commercial challenges by people who have no interest in environmental issues in the Southampton area is so great that it can lead to huge delays. If our collective attempts to get investment in the UK infrastructure are bogged down in legal challenges between rival commercial companies, enormous damage will be done to the chances of getting infrastructure investment under way and rebuilding the economy. There has to be a point where every major company is prepared to consider what is in the UK national interest, not a narrow view of what is in their own local commercial interest.

[Mr George Howarth (Knowsley) (Lab)]

May I thank my right hon. Friend for the reasonable way he has dealt with the conflict between Southampton and Liverpool? He is aware, though, that there are still problems between Liverpool city council and the local authority in Southampton. Liverpool city council has asked for talks with Southampton to see whether common ground can be found. That is a good idea. Does he agree that those local authorities should get together and find common ground, so that it is not either/or, but possibly both?

[Mr Denham]

We are perfectly clear that Liverpool is utterly entitled to have a cruise terminal. The question is whether, given that the one operating successfully in Southampton has been developed entirely with private sector finance, the one in Liverpool should not operate according to the same principles of fair competition. We are more than happy to have that discussion, but I do not want to spend my time this morning getting too far into that issue, because we are in the last critical weeks that will determine whether this investment in Southampton takes place in the autumn. I want to focus on that.

[Jack Dromey (Birmingham, Erdington) (Lab)]

I declare an interest. As deputy general secretary of Unite, I worked with ABP, the local authority and the work force, who are members of Unite, in seeking to drive this project forward. The common ground is the need to rebalance and grow our economy, although we may disagree on how to do that.

Does my right hon. Friend agree that infrastructure is key if we are to grow the economy? This development is in the national interest and the interests of growing the economy. Any further delay will damage not only the interests of Southampton but the prospects of economic recovery.

[Mr Denham]

My hon. Friend is right. The involvement of Felixstowe’s owners in this matter gives a UK angle to the competition, but the blunt truth is that there is no reason to believe that the container work lost from Southampton will end up anywhere in the UK. If the effect is that ships go to Rotterdam and their cargo is broken down for trans-shipment, there is a huge loss to the entire UK economy. That is why a view of what is in the interests of the whole UK is crucial. We can have local fights, but we will look pretty ridiculous if we end up damaging the whole UK economy and sending the business elsewhere.

[Mr Bernard Jenkin (Harwich and North Essex) (Con)]

I congratulate the right hon. Gentleman on obtaining this debate. I support the burden of his remarks. The planning system has become obstructive, although it is understandable that Hutchison Ports, for example, should insist that rules that are being made to apply to it and stifling its investment programme should be applied evenly throughout the industry. That was the burden of its complaint.

Does the right hon. Gentleman agree—and support the Government on this point—that we need to renegotiate the habitats directive, because that is being used, as much as anything, to stymie and bog down important infrastructure projects for bogus, spurious technical and legal reasons, rather than genuine environmental reasons?

[Mr Denham]

I have some sympathy with the hon. Gentleman’s final point. If the objections were coming from Natural England, the Environment Agency, the RSPB and local environment organisations in Hampshire—even if they were using the habitats directive—I would understand their legitimacy. What people in Southampton cannot understand is that, essentially, technical and legal mistakes are being exploited to damage investment.

The hon. Gentleman properly represents his part of the country and his constituents. I hope that he will take back the message that Hutchinson’s may feel that it has made its point, but to continue to pursue this matter now would do enormous damage to the UK economy and to the port of Southampton.

[Mr Jenkin]

But the planning rules are the problem.

[Mr Denham]

Planning rules may be a problem, but they do not always necessarily need to be exploited to damage an investment.

In 2011, three years after the original application, the MMO issued consent. Two months later, Hutchison commenced judicial review proceedings in the High Court, alleging that the environmental impact assessment was defective. In June 2011, without discussion with ABP, the MMO, having listened to that objection, withdrew its consent. The critical issue is, as I understand it, that the judicial review application by Hutchison did not raise any issues that had not previously been raised in 2010 and that the MMO had every opportunity to consider. What actually happened is that the MMO had the chance to consider those objections and decided not to act on them, or decided that they did not have a substantial basis in fact, and issued the consent, but then, faced with a High Court challenge, changed its mind. It is another case where the MMO’s handing of the matter has badly let down everybody involved in the port of Southampton.

Since then, there has been further delay. ABP responded to further requests for analysis that it said it would deliver by 30 September 2011. Just three days before that date, the MMO asked ABP to produce additional information, which caused a further delay. Then—without going through all the twists and turns—there was a further lengthy delay before the MMO finally commenced the consultation on 11 January 2012.

I have gone over the history not to rake up old issues but to stress, for the benefit of the Minister with responsibility for shipping and ports, that the port of Southampton has been on the receiving end of particularly poor treatment by Government agencies, not just under this Government, but in the past. As a result, this major investment has yet to start. I will not hold the Minister or his predecessor, who will be contributing from the Opposition Front Bench, personally responsible for these errors. We know that these things happen deep in the depths of agencies far away, in normal circumstances, from ministerial decisions, but there are times when Ministers need to act.

I wrote to the Secretary of State for Environment, Food and Rural Affairs about this matter in August and again in September. I have to say that, although I am sure that the letters that I received were legally correct, there was no sense of urgency coming from the Department for Environment, Food and Rural Affairs on how the MMO would handle this matter. I was told that, since June, the MMO had maintained a single point of contact with ABP in Southampton and that, in July, it assigned a case team to the application. However, as I have said, that did not prevent further and later requests from the MMO to ABP for additional analysis and information that further delayed the project.

I wrote to the Prime Minister on 24 November. I hope that I am not unduly pompous as an ex-Minister, but there was a time when former Secretaries of State and Privy Counsellors who wrote to Prime Ministers would get a reply a from the Prime Minister or a Secretary of State. I am afraid that it took two months for the Prime Minister to get a junior Minister in DEFRA to send me back pretty much the same letter that I had got from the Secretary of State. There is no sense that the Downing street machine has grasped that it could play a role in making sure that this happens.

We are now at a critical point. The consultation is under way again—that is important—but the consultation period is six weeks. Objections must then be properly considered, because that is the legal process. The MMO must therefore consider objectively any issue raised so that, should it give approval, its decision cannot be challenged. The potential for delay is significant, and it is essential for the MMO to have sufficient resources and access to sufficient expertise to give the decision proper consideration. That is what I am asking the Minister to take away today and to take to his colleagues in DEFRA. We cannot have a situation in which either the MMO does not have the resources or expertise to consider the consultation responses properly or mistakes are made, thus laying the process open to further legal challenge.

I ask the Minister to consider one other factor. It is not for him or the House to constrain the courts, but in truth the move for judicial review came not from a statutory or voluntary environmental organisation, nor from any group that might be affected by the environmental impact of the port, but from a commercial operator, and it seems pretty clear that the motives were to inflict commercial damage on a rival. That raises a massive challenge to the Government’s plans to encourage infrastructure investment in the UK.

[Steve Rotheram (Liverpool, Walton) (Lab)]

Before my right hon. Friend concludes, I absolutely support the aim expressed in his earlier comments that we should work in the greater interest of the whole UK economy. Will he therefore agree to broker a meeting between the Southampton and Liverpool authorities, so that we can put to bed the animosity between the two and move forward on what is in the interest of both Liverpool and the UK, to grow the economy in Merseyside?

[Mr Denham]

Our two great port cities have a lot in common, in history and in the future, and I hope that Southampton and Liverpool will work together in the future. The Minister’s decision on the issue is imminent, and we will all want to consider it carefully. We are very consistent in Southampton: we are not saying that Liverpool should not have a cruise terminal; we are merely saying that competition should be fair and on the same basis of cruise terminal capacity development. We are not out to say, “You have no right to have cruise ships. You have no right to have this industry,” but the competition must be fair, so if meetings will improve understanding, they would be helpful.

The vast majority of ports in this country are privately operated, but they all depend on either the actions of Government agencies or, sometimes, public investment. The Government’s infrastructure plan, for example, included proposals to improve roads that would help, among other things, to support the port of Felixstowe. We will get into a terrible position, however, if urgent investment in the UK economy routinely becomes the matter of legal challenge by different commercial companies picking up technicalities and details of arguments rather than pursuing the UK national interest. I do not expect the Minister to say much or, probably, if he is prudent, anything at all on that point—I am sure that he will be measured—but Ministers need to have that serious discussion with major companies in this country, to ensure that the interests of UK plc always come first, particularly in such difficult times.

--- Later in debate ---

[Dr Coffey]

I understand that perspective entirely, and I will address it briefly.

My hon. Friend the Member for New Forest East (Dr Lewis) has been inconsistent in his argument. He was very generous to Hutchison, especially regarding its advice on Dibden bay, which I remember well because I lived in Hampshire at the time. Again, the argument is about consistency, and ABP and Hutchison are united in saying that nobody objects to Liverpool’s having a cruise terminal, but it should be on equal terms. Both port operators share that position. I do not, therefore, accept that we are talking about different things, although the joy of being a politician is that our greatest competence has to be dealing with paradox.

[Mr Denham]

I realise that time is short, but the point about the legal challenge is that no one is suggesting that Hutchison has suffered massive commercial damage because the MMO got its procedures wrong. If the port of Felixstowe faced closure because of bungling by the MMO, I would understand the hon. Lady’s point. However, she is justifying doing enormous commercial damage to the port of Southampton and the United Kingdom because something has been found not to have been done properly, and the action is totally out of proportion to any damage that Felixstowe has suffered. That is really the objection of Members from Hampshire on both sides of the Chamber.

[Dr Coffey]

I understand that perspective entirely. I am not suggesting that I would encourage Hutchison to continue to apply for judicial review after judicial review.

I have no objection to Southampton being able to accommodate the largest boats, just as Felixstowe can now, but it is critical to encourage the MMO to act swiftly and properly. At the end of the day, it is about ensuring that our civil service agencies can tackle things, and as was said earlier there is the question of making sure that there are resources. It is about focusing on what matters for the UK economy. If the agency had pulled its finger out and made sure that ABP had done its assessment properly in the first place, we might not be in this mess. I would encourage the agency to devote its resources to the issue in question, rather than devoting any further resources to marine conservation zones; that would have an impact on ports around the country, including Southampton and Felixstowe. It should make sure it is business-friendly, pull its finger out and ensure that the law is applied consistently.

--- Later in debate ---

[Mike Penning]

I do not know how Hansard is going to get the word “cock-up” in, but there it is again.

The MMO is a quango with almost no ministerial control whatever. Many of the civil servants in the previous incarnation did not transfer to the new organisation because it was reincarnated in Newcastle. Much of the personal knowledge about this particular case was not transferred. Once we have got through this—I must ensure that I do not interfere with any judicial process—we will be looking very closely at the matter. Remember this is a Department for Environment, Food and Rural Affairs and Department for Transport issue. Do not get me wrong, the Minister would never have seen this; it would never have got to him. This was below the radar level. None the less, it is quite simple to say, “You looked at these ports and you asked for this, this and this. When you came to this port, you didn’t ask for something that you have asked for at nearly every other port that I have looked at.” We will address this matter.

I want to look at how the MMO works. As the Minister standing before the Chamber, listening to colleagues and going on visits, it is enormously frustrating having very little control over things such as the harbour revision order. Even if the whole local community and the MP is against that order, all I can do is advise the MMO; I cannot actually instruct it.

[Mr Denham]

I am sure that there are many bigger issues to do with the MMO that need to be dealt with; the Minister is right. None the less, in five weeks’ time, the consultation will end. The MMO has to deal properly with that consultation so that it is free of legal challenge, but it must do it in an extremely timely manner. One of the reasons for having the debate with this Minister and this Department is that it is this Department that understands how important the issue is. I am not convinced that DEFRA Ministers do, and I am not sure that the MMO does. What we are asking the Minister today is for him and his Secretary of State to say to DEFRA, “In five weeks’ time, if you don’t have the right people in place with the right expertise, you will not be able to handle this in a satisfactory and timely manner.”

[Mike Penning]

I thank the right hon. Gentleman and he has probably taken the first point that I was going to make. I can do three things today. First, I can speak to my counterparts in DEFRA and tell them how seriously we consider this matter. If the MMO does not have the expertise, capacity and confidence to make a watertight decision, we will offer it the officials to help it to do that. It is independent of the Department for Transport, but I am sure that we can provide secondments if we need to.

The second thing we can do, which was mentioned by my hon. Friend the Member for Suffolk Coastal (Dr Coffey), is to say to Hutchison, “You have made your point.” There is no benefit in delaying this matter with a further challenge. As long as Associated British Ports does what it is asked to do with regards to the MMO and it supports the MMO decision, then that should be it. I cannot make it do that, but I am a constructive friend. I am sure that there are people who will be listening carefully to what the Minister has said about this delay. I am a friend of all the ports. I want competition, but this is not looking particularly good any more with regard to Hutchison. I fully understand its position. The law was not adhered to and maladministration took place, which is why the judicial review was minded to go down such an avenue. For lots of reasons, not least those relating to UK plc, jobs, infrastructure and the people of the Southampton area, we need to move on. Capacity ports need to be available. When outside investment considers UK plc, they may say, “We would like to invest there”. However, their Google alert or some other agency may then say, “Hold up a second, if you try to get consent down there, these are the sorts of problems you will get.”

I want Bristol to go ahead with its decisions. I want Liverpool, separate from the cruise business, to be able to go ahead with the deepwater port. I want Tees to go ahead as well. The Tyne is another one that should go ahead despite the issues relating to contamination. I was there only the other day. If all those ports go ahead, it will create the capacity that we need to get freight off the roads. As our economy grows, and it will grow, we need to ensure that we can be in the marketplace. We need to be a hub for these huge containers. Let us not underestimate the sheer size of the task that we are talking about. I stood at Felixstowe on the deck of one of the larger Maersk ships and looked down on the cranes that were trying to load her. Those cranes have now been replaced by even larger ones, which the Secretary of State must have seen when she was there the other day.

We need to be in-step with a market that is world led. We have been world leaders in this field for years and years. We stepped back when previous Governments did not take ports and shipping seriously. I do take them seriously and I hope that this plan goes ahead for Southampton.